Overview
Magpie is a DeFi ecosystem that applies the "Convex model" — accumulating governance tokens to boost yields — across multiple platforms through a SubDAO structure. Just as Convex Finance accumulated CRV tokens to boost Curve yields, Magpie's sub-protocols accumulate governance tokens from various DeFi platforms.
The ecosystem's SubDAO model is its defining feature:
- Magpie (core) — yield booster for Wombat Exchange, accumulating WOM tokens
- Penpie — yield booster for Pendle Finance, accumulating PENDLE
- Radpie — yield booster for Radiant Capital, accumulating RDNT
- Eigenpie — liquid restaking protocol for EigenLayer
- Campie — yield booster for Camelot DEX
Each SubDAO operates as a semi-independent protocol with its own token, governance, and treasury, while sharing the Magpie ecosystem's brand, community, and development team. This model allows rapid expansion into new yield-boosting opportunities without diluting the core protocol.
The MGP token is the overarching governance token, while each SubDAO has its own token (PNP for Penpie, RDP for Radpie, etc.).
Smart Contracts
The smart contract architecture follows the established Convex model pattern:
- Token locking — lock governance tokens of underlying protocols (WOM, PENDLE, RDNT) to accumulate voting power
- Yield boosting — use accumulated voting power to direct emissions and boost yields for depositors
- Bribe markets — facilitate bribe payments from protocols seeking gauge votes
- Multi-chain deployment — contracts deployed across Ethereum, Arbitrum, BNB Chain, and other chains
The contracts are reasonably well-designed for the governance aggregation use case. However, the proliferation of SubDAOs means a large total attack surface — each SubDAO's contracts represent independent risk.
Note: Penpie, one of the SubDAOs, suffered a $27M exploit in September 2024, demonstrating that this attack surface is not theoretical.
Security
Security is a significant concern given the Penpie exploit. The $27M exploit on Penpie targeted the reward claiming mechanism, allowing an attacker to drain funds from the protocol. This exploit highlights the risk of the SubDAO model — each sub-protocol introduces additional smart contract risk.
Other SubDAOs have not been exploited, and audits have been conducted across the ecosystem. However, the rapid deployment of new SubDAOs (each targeting a new platform) creates ongoing security challenges. Each new SubDAO integration requires new contract code and new audit cycles.
Yield Generation
Yield generation is the ecosystem's strength. The governance token aggregation model is proven (Convex demonstrated it works for Curve) and provides genuine value:
- Depositors earn boosted yields without needing to lock governance tokens themselves
- The protocol's accumulated voting power creates a compounding advantage
- Bribe income from protocols seeking gauge votes provides additional yield
The multi-platform approach through SubDAOs diversifies yield sources — the ecosystem isn't dependent on a single platform's success. Yields vary by SubDAO and underlying platform but generally outperform direct deposits.
Adoption
The ecosystem has attracted reasonable TVL across its SubDAOs. Penpie has been the most successful SubDAO, accumulating significant PENDLE voting power. Eigenpie has attracted attention through the EigenLayer/restaking narrative.
The community spans multiple ecosystems, which provides broad exposure but can dilute focus. The MGP token's value depends on the aggregate success of all SubDAOs.
Tokenomics
The multi-token structure (MGP + individual SubDAO tokens) creates complexity:
- MGP — overarching governance token with revenue sharing from all SubDAOs
- vlMGP — vote-locked MGP for governance and boosted rewards
- SubDAO tokens (PNP, RDP, etc.) — individual governance tokens for each sub-protocol
The revenue-sharing model directs a portion of each SubDAO's income to MGP stakers, creating aggregate value. However, the multiple tokens can confuse users and fragment liquidity.
Risk Factors
- Penpie exploit — $27M loss demonstrates real smart contract risk across SubDAOs
- Complexity — multiple SubDAOs, tokens, and chains create understanding and risk challenges
- Dependency risk — each SubDAO depends on the underlying platform's success
- Audit scaling — rapid SubDAO deployment makes comprehensive auditing difficult
- Token fragmentation — multiple tokens (MGP, PNP, RDP, etc.) dilute liquidity
- Platform risk — if an underlying platform fails, the associated SubDAO loses value
Conclusion
Magpie Ecosystem scores 4.5, reflecting a clever and well-executed yield aggregation strategy offset by the security risks exposed by the Penpie exploit and the complexity inherent in the SubDAO model. The governance token aggregation model works — it's been proven by Convex and Magpie has successfully replicated it across multiple platforms. The SubDAO model is an innovative organizational approach that enables rapid expansion. However, the Penpie exploit is a stark reminder that each new SubDAO introduces real financial risk. The ecosystem's future depends on maintaining security standards while continuing to expand into new yield opportunities.